LST2BSL Business Law and Ethics- Office Pro X9

Answer those question below:

1. Is it a term of the contract that the Office Pro X9 is an amazing chair and/or the best on the market? Motivat.
2. Is it a term of the contract that the Office Pro X9 provides sufficient lower-back support to allow Peter to work comfortably the whole day?
3. If it is a term of the contract that the Office Pro X9 provides sufficient lower-back support to allow Peter to work comfortably the whole day, what kind of term is it?
4. Does the exclusion clause, clause 10, prevent Peter from suing Forever Furniture for breach of contract because the Office Pro X9 was not providing sufficient back support to work the whole day.

Answers

1. Issue

The issue in this case is to find out whether the representation stating PRO X9 is an amazing chair and/or is the best on the market is a term of the contract or not

Rule

There is a significant difference between a puffery and a term of a contract. a puffery has no legal significance whereas a term of a contact is legally binding on the parties to it. As provided by the case of REA Group Limited v Fairfax Media Limited a puffery is a statement made by the seller to praise overly about his products. However a reasonable person is deemed to differentiate between a term of a contract and a puffery.

The concept of puffery comes to the context through the case of Carlill v Carbolic Smoke Ball Company the defendants provided that the advertisement was a mere puff but the court held otherwise. In the case it was provided by the court that if the puff is enough to induce a prudent person into the contract than it cannot be regarded as a puff and would be considered as a term of a contract.

In Australia a clause is a puffery or a term of the contract is also determined through the application of the principles provided in the carbolic case. In addition the subject matter of the contract is also taken into account to determine whether a clause is a term or a puff. If a puff induces a person to get into a contract it would be regarded as a tem and can lead to misrepresentation.

Application

In the given circumstances it has been peter has opted to buy a chair from forever furniture. The shop owner Samantha after listening to the requirements of peter in relation to a chair provides him that  PRO X9 is an amazing chair and is one of the best on the market. According to the principles of puffery discussed above it is clear that the show owner is making an exaggerated statement in relation to her product. Any reasonable person would be able to understand that it is a puffery and not a term of the contract and would not get induced into the contract through such representation. In addition the term is also not related to the subject matter of the contract which is to provide the customer with a suitable chair in relation to their needs.

Conclusion

Thus PRO X9 is an amazing chair and/or is the best on the market is not a term of the contract and is a mere puffery.

2. Issue

The issue in this case is to find out whether OFFICE PRO X9 giving proper lower back support which would allow peter to work comfortably is a term of the contract or not?

Rule

In contract law the intention of the parties to bind each other to the contract is not analyzed by the application of the subjective intention of the party but the objective intension as provided in the case of Esso Petroleum v Mardon. The objective intention is found out through the objective test that a reasonable person would get into a contract relying on a representation or not.

It has already been discussed above in the case of Carbolic smoke ball that if a person is induced by the representation of the other to get into the contract such representation is regarded as a term of the contract.

A puffery is mere exaggeration of a product but it cannot be related to the subject matter of the product and if it does it is considered as a term of a contract.

In the case of Harling v Eddy it was provided by the court that a representation made by the seller which is out of the knowledge of the buyer is considered as a term of the contract. However in this case the buyer had subject matter knowledge about the product. 

Application

In the provided circumstances the seller of the chair had made a representation to Mr Peter that the chair would be able to provide sufficient lower back support to him while he is working. One of the primary requirements of the buyer was to have a chair which would be able to provide him support in relation to his lower back. Applying the objective test in this case it can be said that a reasonable person in same situation would have relied on such terms to get induced into the contract of sale. Peter similarly was induced to purchase the chair only because it would provide him lower back support in relation to his back while he works. He did not have any subject matter knowledge in relation to the chair. Thus as per the above discussed cases it can be said that the chair providing lower back support would be assumed as a term of the contract.

Conclusion

Office Pro X9 giving proper lower back support is a term of the contract

3. A contract majorly consists of three types of terms namely

i. Conditions

ii. Warranties

iii. Intermediate terms

A condition is a terms of the contract on which the primary subject matter of the contract is based. A condition thus is the most important out of the three terms of contract. A breach of a condition in relation to a contract directly empowers the other party to get out of the contract and claim any other kind of losses incurred by them in relation to the contract. A breach of condition is therefore unacceptable in relation to a contract. It is a promise or a statement of fact which constitutes the base of the contract as provided in the case of Poussard v Spiers 

A term which refers to the subject matter of the contract however it does not form the main purpose for which the contract has been formed is known as a warranty. The term is not as significant as the condition in relation to a contract. When a warranty is breached in relation to a contract it does not give power to the other party to end the contract. However party may claim damages resulting out of the breach of such terms as provided in the case of Bettini v Gye 

The approach related to an innominate term was made in the case of Hong Kong Fir Shipping v Kawasaki Kisen Kaisha. In this case instead of stating a term as warranty or condition the approach takes into account the effect of the breach.

Application

In the given case it is clear that the OFFICE PRO X9 giving proper lower back support to peter for his work is a subject matter of the contract and he only brought the chair on the basis of such representation. This means that it is a condition of the contract and not a warranty as it is not an inconsequential term of the contract.

Conclusion

The term is a condition of the contract

4. Issue

The issue in this case is to determine the validity of the exclusion clause in the contract

Rule

In the case of L'Estrange V Graucob it was ruled by the court that even if a person is not aware about the terms of a contract an there has been no misrepresentation or fraud involved than such terms would be binding in the person if they have signed the contract.

As provided in the case of Curtis V Chemical Cleaning Co an exclusion clause can be incorporated into a contract through a signature.

In the case of Baldry V Marshall it was ruled by the court that in case there is uncertainty or ambiguity in the exclusion clause it would be interpreted against the party who has incorporated such clause.

Application

In the given circumstances it has been provided that the chair which was bought by peter based on the representation made by the seller was not according to his needs. The chair did not provide any back support to peter and he was not able to work comfortably.

The contract of sales contains an exclusion clause stating that the shop is not liable for the breach of warranties. As per the principles of the L'Estrange case all terms of the contract is binding on peter as he signed it whether he read them or not. In addition through the Curtis case it was provided that an exclusion clause can be added through signature thus in this case it is valid.

However the term breach by the seller was a condition and not a warranty as discussed in the previous part. In addition even if the seller claims it to be warranty it would be interpreted against him as per the principles of the Baldry case. Thus the seller cannot use the exclusion clause to restrict peter from making a claim against them.

Conclusion

The exclusion clause would not restrict the rights of peter